Regulation for
Registration of Indian Insurance Companies
1. Short title and
commencement
2. Definitions
3. Procedure for registration
4.
Classes of insurance business for which requisition for
registration application may be made
5. Requisition for registration application
6.
Furnishing of further information and clarification, etc.
7.
Consideration of requisition for registration application
8.
Rejection of requisition for registration application
9.
Action upon rejection of application for requisition
10. Application for registration
11.
Manner of calculation of twenty-six per cent equity capital held
by a foreign company
12. Consideration of application
13. Rejection of application for registration
14.
Effect of rejection of application for registration
15. Manner of payment of fee for registration
16. Grant of certificate of registration
17. An applicant granted a certificate of
registration
18. The Authority on receipt of the request referred to in
regulation 17 will examine it and communicate its decision in
writing either rejecting the request or granting it.
19. No extension of time shall be granted by the Authority
20. Manner of renewal of certificate
21.
Manner of payment of fee for renewal of certificate
22. Issue of duplicate certificate
23. Suspension of certificate
24.
Manner of making order of suspension or cancellation of
certificate
25.
Manner of holding enquiry before suspension or cancellation
26. Show-cause notice and order
27.
Effect of suspension or cancellation of certificate
28. Publication of order
29. Registration of existing insurers
30. Transitory provisions
In
exercise of the powers conferred by section 114A of the Insurance
Act, 1938 (4 of 1938) read with section 26 of the Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999), the
Authority, in consultation with the Insurance Advisory Committee,
hereby makes the following regulations, namely--
1.
Short title and commencement
(1)
These regulations may be called the Insurance Regulatory and
Development Authority (Registration of Indian Insurance Companies)
Regulations, 2000.
(2)
They shall come into force on the date of their publication in the
Official Gazette.
2.
Definitions
In
these regulations, unless the context otherwise requires, --
(a)
"Act" means the Insurance Act, 1938 (4 of 1938);
(b)
"Authority" means the Insurance Regulatory and
Development Authority established under sub-section (1) of section 3
of the Insurance Regulatory and Development Authority Act, 1999 (41
of 1999);
(c)
"certificate" means a certificate of registration
granted or renewed by the Authority under these regulations;
(d)
"enquiry officer" means an officer of the Authority
or any person specifically appointed by it to conduct an enquiry for
purposes of these regulations;
(e)
"general annuity business" means the business of
effecting contracts to pay annuities on human life but does not
include contracts under pension business;
(f)
"health insurance business" or "health
cover" means the effecting of contracts which provide sickness
benefits or medical, surgical or hospital expense benefits, whether
in-patient or out-patient, on an indemnity, reimbursement, service,
pre-paid, hospital or other plans basis, including assured benefits
and long-term care;
(g)
"Indian promoter" means and includes--
(i)
a company formed under the Companies Act, 1956 (1 of 1956), which is
not a subsidiary as defined in section 4 of that Act;
(ii)
a banking company as defined in sub-section (4A) of section 2 of the
Act but does not include a foreign bank or branch thereof
functioning in India;
(iii)
a Public financial institution as defined in section 4A of the
Companies Act, 1956 (1 of 1956);
(iv)
a co-operative society registered under any relevant law for the
time being in force;
(v)
a person, who is an Indian citizen or a combination of persons who
are Indian citizens;
(h)
"infrastructure facility" means--
(i)
a road, highway, bridge, airport, port, railways including BOLT,
road transport system, a water supply project, irrigation project,
industrial parks, water treatment system, solid waste management
system, sanitation and sewerage system;
(ii)
generation or distribution or transmission of power.
(iii)
telecommunication;
(iv)
project for housing;
(v)
any other public facility of a similar nature as may be notified by
the Authority in this behalf in the Official Gazette;
(i)
"linked business" means life insurance contracts or
health insurance contracts under which benefits are wholly or partly
to be determined by reference to the value of underlying assets or
any approved index;
(j)
"non-linked business" means life insurance
contracts or health insurance contracts which are not linked
business;
(k)
"pension business" includes business of effecting
contracts to manage investments of pension funds or superannuation
schemes or contracts to pay annuities that may be approved by the
Authority in this behalf;
(l)
"principal officer" means any person connected with
the management of the applicant or any other person upon whom the
Authority has served notice of its intention of treating him as the
principal officer thereof;
(m)
All words and expressions used herein and not defined but
defined in the Insurance Act, 1938 (4 of 1938), or in the Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999), shall
have the meanings respectively assigned to them in those Acts.
CHAPTER
II
3.
Procedure for registration
(1)
An applicant desiring to carry on insurance business in India shall
make a requisition for registration application in
Form IRDA/R1.
(2)
An applicant, whose requisition for registration application has
been accepted by the Authority, shall make an application in
Form
IRDA/R2 for grant of a certificate of registration.
4.
Classes of insurance business for which requisition for registration
application may be made
(1)
An applicant shall make a separate requisition for registration
application under regulation 3 for each class of business of
insurance.
(2)
The classes of business of insurance for which requisition for
registration application may be made are,--
(a)
life insurance business consisting of linked business, non-linked
business or both; or
(b)
general insurance business including health insurance business (or
health cover).
5.
Requisition for registration application
(1)
An applicant shall be eligible to apply for requisition referred to
in sub-regulation (1) of regulation 3, if such applicant upon
registration will be an Indian insurance company as defined in
section 2(7A) of the Act:
PROVIDED
that the applicant whose, --
(i)
requisition for registration application has been rejected by
the Authority at any time during the preceding five financial years
on the date of requisition for registration application; or
(ii)
application for registration has been rejected by the
Authority at any time during the preceding five financial years on
the date of requisition for registration application; or
(iii)
certificate of registration has been cancelled or withdrawn
by the Authority; or
(iv)
name does not contain the words 'insurance company' or
'assurance company'
shall not be
eligible to make a requisition for registration application under
this regulation.
(2)
Every requisition for registration application shall be accompanied
by--
(a)
a certified copy of the memorandum of association and
articles of association, where the applicant is a company and
incorporated under Companies Act, 1956 (1 of 1956);
(b)
the name, address and the occupation of the directors and
principal officer;
(c)
a statement of the class
of insurance business proposed to be carried on;
(d)
a statement indicating the sources that will contribute the
share capital required under section 6 of the Act.
6.
Furnishing of further information and clarification, etc.
(1)
The Authority may require the applicant, which makes a requisition
under regulation 3, to furnish further information or clarification
regarding the matters relevant to consider the requisition for
registration application.
(2)
The applicant referred to in sub-regulation (1) of Regulation 5, if
so required, may appear before the Authority through its principal
officer.
7.
Consideration of requisition for registration application
The
Authority on being satisfied that--
(a)
the requisition in Form IRDA/R1 is complete in all respects
and is accompanied by all documents required therein;
(b)
all information given in the
Form IRDA/R1 is correct;
(c)
the applicant will carry on all functions in respect of the
insurance business including management of investments within its
own organisation;
(d)
the applicant submitting requisition for registration
application--
(i)
is a bona fide applicant for registration under section 3 of the
Act,
(ii)
will be in a position to comply with all the requirements for grant
of certificate,
may accept
the requisition and direct supply of the application for
registration to the applicant.
8.
Rejection of requisition for registration application
(1)
Where the requirements under regulation 7 are not complied with, the
Authority may, after giving the applicant a reasonable opportunity
of being heard, reject the application.
(2)
The order rejecting the application under sub-regulation (1) shall
be communicated by the Authority within thirty days of such
rejection to the applicant in writing stating therein the ground on
which the application has been rejected.
(3)
An applicant aggrieved by the decision of the Authority under
sub-regulation (2) may, within a period of thirty days from the date
of such communication, apply to the Authority for reconsideration of
its decision.
(4)
The Authority shall consider the application made under
sub-regulation (3) and communicate its decision, as soon as
possible, in writing to the applicant.
9.
Action upon rejection of application for requisition
An
applicant, whose requisition for registration application has been
rejected, may approach the Authority with a fresh request for
registration application after a period of two years from the date
of rejection, with a new set of promoters and/or for a class of
insurance business other than the originally proposed one.
CHAPTER
III
10.
Application for registration
(1)
An applicant, whose requisition has been accepted, may make an
application in Form IRDA/R2 for grant of certificate of
registration.
(2)
Every application shall be accompanied by--
(a)
documentary proof evidencing the making of deposit required
under section 7 of the Act;
(b)
evidence of having rupees one hundred crore or more paid-up
equity share capital, in case the application for grant of
certificate is for life insurance business or general insurance
business;
(c)
evidence of having rupees two hundred crore or more paid-up
equity share capital, in case the application for grant of
certificate is for re-insurance business;
(d)
an affidavit by the principal officer and the promoters of
the applicant certifying that the requirements of the first proviso
to section 6 of the Act to the effect that paid-up share capital is
adequate after excluding any preliminary expenses incurred in the
formation and registration of the company and the deposit required
to be made under section 7 of the Act have been satisfied;
(e)
a statement indicating the distinctive numbers of shares
issued to each promoter and shareholder in respect of share capital
of the applicant;
(f)
an affidavit by the principal officer and the promoters of
the applicant certifying that the paid-up equity capital referred to
in sub-clause (b) of clause (7A) of section 2 of the Act, calculated
is in accordance with regulation 11 does not exceed twenty-six per
cent;
(g) a certified copy of the published prospectus, if any;
(h)
a certified copy of the standard forms of the insurer and
statements of the assured rates, advantages, terms and conditions to
be offered in connection with insurance policies together with a
certificate by an actuary in case of life insurance business that
such rates, advantages, terms and conditions are workable and sound;
(i)
a certified copy of the memorandum of understanding entered
into between the Indian promoter and the foreign promoter, if any,
or amongst the promoters as a whole including details of the support
comfort letters exchanged between the parties;
(j)
the original receipt showing payment of the fee of rupees
fifty thousand for a class of business;
(k)
a certificate from a practising chartered accountant or a
practising company secretary cetifying that all the requirements
relating to registration fees, share capital, deposits, and other
requirements of the Act have been complied with by the applicant;
(l)
any other information required by the authority during the
processing of the application for registration.
11.
Manner of calculation of twenty-six per cent equity capital held by
a foreign company
(1)
For the purposes of the Act and these regulations, the calculation
of the holding of equity shares by a foreign company either by
itself or through its subsidiary companies or its nominees
(hereafter referred to as foreign investor) in the applicant
company, shall be made as under and shall be aggregate of--
(i)
the quantum of paid-up equity share capital held by the
foreign company either by itself or through its subsidiary companies
or nominees in the applicant company;
(ii)
the quantum of paid-up equity share capital held by other
foreign investors, non-resident Indians, overseas corporate bodies
and multinational agencies in the applicant company; and
(iii)
the quantum represented by that proportion of the paid-up
equity share capital to the total issued equity capital of an Indian
promoter company mentioned in sub-clause (i) of clause (g) of
regulation 2 held or controlled by the category of persons mentioned
in sub-clauses (i) and (ii) of this sub-regulation.
Explanation :
For purposes of calculation referred to above, account need not be
taken of the holdings of equity in an Indian promoter company held
by foreign institutional investors, other than the foreign promoters
of the applicant and their subsidiaries and nominees, and Indian
mutual funds to the extent the investment of foreign institutional
investors and Indian mutual funds are within the approved limits
laid down by the Securities and Exchange Board of India under its
rules, regulations or guidelines issued from time to time.
(2)
Every insurer who has been granted registration under the Act shall,
within 15 days of the end of every quarter, furnish to the Authority
a statement indicating changes exceeding 1% of the issued capital in
the holding of the shares in his company and those of the promoter.
(3)
Interpretation : The
interpretation of this regulation will be that of the Authority,
whose decision on all issues will be binding on all
applicants/insurers and will be final.
12.
Consideration of application
(1)
The Authority shall take into account for considering the grant of
certificate, all matters relating to carrying on the business of
insurance by the applicant.
(2)
In particular and without prejudice to the generality of the
foregoing without in any manner affecting its freedom, the Authority
shall consider the following matters for grant of certificate to the
applicant, namely--
(a)
the record of performance of each of the promoters in the
fields of business/profession they are engaged in;
(b)
the record of performance of the directors and persons in
management of the promoters and the applicant;
(c)
the capital structure of the applicant company;
(d)
the extent of obligation to provide life insurance or general
insurance policies to the persons residing in the rural sector,
workers in the unorganised sector or informal sector or for
economically vulnerable or backward classes of the society and other
categories of persons specified by the Authority;
(e)
the nature of insurance products;
(f)
the planned infrastructure of the applicant company,
including branches in rural areas, to effectively carry out the
insurance business;
(g)
the level of actuarial and other professional expertise
within the management of the applicant company;
(h)
the organisation structure of the applicant to meet the
requirements of regulation 7(c);
(i)
other relevant matters for carrying out the provisions of the
Act.
(3)
The Authority shall give preference in grant of certificate of
registration to those applicants who propose to carry on the
business of providing health covers to individuals or groups of
individuals.
13.
Rejection of application for registration
(1)
Where an application for registration is not complete in all
respects and does not conform to the regulations or instructions
specified in Form IRDA/R2, and after considering matters referred to
in regulations 12 and 16 and on being satisfied that it is not
desirable to grant a certificate by the Authority, by an order, may
reject the application.
(2)
The order rejecting the application under sub-regulation (1) shall
be communicated by the Authority within thirty days of such
rejection to the applicant in writing stating therein the ground on
which the application has been rejected.
(3)
An applicant aggrieved by the decision of the Authority under
sub-regulation (2) may, within a period of thirty days from the date
of such communication, appeal to the Central Government in
accordance with sub-section (2C) of section 3 of the Act, for
reconsideration of such decision.
(4)
The decision of the Central Government on such appeal shall be final
and shall not be questioned before any Court.
(5)
The fees, referred to in clause (j) of sub-regulation (2) of
regulation 10, shall not be refunded.
14.
Effect of rejection of application for registration
An
applicant, whose application for registration has been rejected
shall not be entitled to a certificate.
An
applicant may approach the Authority with a fresh request for
registration after a period of two years from the date of rejection,
with a new set of promoters and/or for a class of insurance business
other than the originally proposed one.
15.
Manner of payment of fee for registration
The
fee of rupees fifty thousand for each class of business for
registration shall be remitted by a bank draft issued by any
scheduled bank in favour of the Insurance Regulatory and Development
Authority payable at New Delhi.
16.
Grant of certificate of registration
The
Authority, after making such inquiry as it deems fit and on being
satisfied that--
(a)
the applicant is eligible, and in its opinion, is likely to
meet effectively its obligations imposed under the Act;
(b)
the financial condition and the general character of
management of the applicant are sound;
(c)
the volume of business likely to be available to, and the
capital structure and earning prospects of, the applicant will be
adequate;
(d)
the interests of the general public will be served if the
certificate is granted to the applicant in respect of the class of
insurance business specified in the application; and
(e)
the applicant has complied with the provisions of sections
2C, 5, 31A, 32 and 32A has fulfilled all the requirements of these
sections applicable to him,
may register
the applicant as an insurer for the class of business for which the
applicant is found suitable and grant him a certificate in
Form IRDA/R3.
17.
An applicant granted a certificate of registration under the
regulations shall commence insurance business for which he has been
authorised within 12 months of the date of registration:
PROVIDED
however, that if the company feels that it will not be able to
commence the insurance business within the specified period of 12
months, it can before the time-limit expires, seek an extension, by
a proper written application, to the Authority.
18.
The Authority on receipt
of the request referred to in regulation 17 will examine it and
communicate its decision in writing either rejecting the request or
granting it.
19.
No extension of time
shall be granted by the Authority beyond 24 months from the date of
grant of registration under
Regulation 16.
CHAPTER
IV
20.
Manner of renewal of certificate
(1)
An insurer, who has been granted a certificate under section 3 of
the Act, shall make an application in
Form IRDA/R5 for the renewal
of the certificate in Form IRDA/R6
to the Authority before the 31st
day of December each year, and such application shall be accompanied
by evidence of the payment of the fee which shall be higher of,--
(a)
fifty thousand rupees for each class of insurance business,
and
(b)
one-tenth of one per cent of total gross premium written
direct by an insurer in India during the financial year preceding
the year in which the application for renewal of certificate is
required to be made, or rupees five crores, whichever is less; (and
in the case of an insurer carrying on solely re-insurance business,
instead of the total gross premium written direct in India, the
total premium in respect of facultative re-insurance accepted by him
in India shall be taken into account).
(2)
If the insurer fails to apply for the renewal of registration before
the date specified in sub-regulation (1), the Authority may accept
an application for renewal of registration on receipt of the fee
payable with the application along with an additional fee by way of
penalty of ten per cent of the fee payable with the application.
21.
Manner of payment of fee for renewal of certificate
The
fee for renewal of certificate shall be paid to the account of
Insurance Regulatory and Development Authority with the Reserve Bank
of India.
22.
Issue of duplicate certificate
The Authority may, on receipt of fee of rupees five thousand, issue
a duplicate certificate to an insurer, if the insurer makes an
application to the Authority in
Form IRDA/R4.
CHAPTER
V
PROCEDURE
FOR ACTION IN CASE OF DEFAULT
23.
Suspension of certificate
Without
prejudice to any penalty which may be imposed or any action taken
under the provisions of the Act, the registration of an Indian
insurance company or insurer who--
(a)
conducts its business in a manner prejudicial to the
interests of the policy holders;
(b)
fails to furnish any information as required by the Authority
relating to its insurance business;
(c)
does not submit periodical returns as required under the Act
or by the Authority;
(d)
does not cooperate in any inquiry conducted by the Authority;
(e)
indulges in manipulating the insurance business;
(f)
indulges in unfair trade practices;
(g)
fails to make investment in the infrastructure or social
sector specified under sub-section (1A) of section 27D
of the Act,
may be
suspended for a class or classes of insurance business for such
period as may be specified by the Authority by an order:
PROVIDED
that the Authority for reasons to be recorded in writing may, in
case of repeated defaults of the type mentioned above, impose a
penalty of cancellation of certificate.
24.
Manner of making order of suspension or cancellation of certificate
No
order of suspension or cancellation shall be imposed except after
holding an enquiry in accordance with the procedure specified in
these regulations.
25.
Manner of holding enquiry before suspension or cancellation
(1)
For the purpose of holding an enquiry under regulation 24, the
Authority may appoint an enquiry officer.
(2)
The enquiry officer shall issue to the insurer a notice at the
registered office or the principal place of business of the insurer.
(3)
The insurer may, within thirty days from the date of receipt of such
notice, furnish to the enquiry officer a reply, together with copies
of documentary or other evidence relied on by it or sought by the
Authority from the insurer.
(4)
The enquiry officer shall give a reasonable opportunity of hearing
to the insurer to enable it to make submissions in support of its
reply made under sub-regulation (3).
(5)
Before the enquiry officer, the insurer may either appear in person
or through any person duly authorised by the insurer:
PROVIDED
that no advocate shall be permitted to represent the insurer at the
enquiry:
PROVIDED
FURTHER that where an advocate has been appointed by the Authority
as the presenting officer under sub-regulation (6), it shall be
lawful for the insurer to present its case through an advocate.
(6)
If it is considered necessary, the enquiry officer may ask the
Authority to appoint a presenting officer to present its case.
(7)
The enquiry officer shall, after taking into account all relevant
facts and submissions made by the insurer, submit a report to the
Authority and recommend the penalty to be awarded as also the
justification of the penalty proposed.
26.
Show-cause notice and order
(1)
On receipt of the report from the enquiry officer, the Authority
shall consider the same and if considered necessary by it, issue a
show-cause notice as to why a penalty as it considers appropriate
should not be imposed.
(2)
The insurer shall, within twenty-one days of the date of receipt of
the show-cause notice, send a reply to the Authority.
(3)
The Authority after considering the reply to the show-cause notice,
if received, shall, as soon as possible but not later than thirty
days from the receipt of the reply, if any, pass such orders as it
deems fit. If no reply
is furnished to the Authority by the insurer within 90 days of the
service of the notice, the Authority can proceed to decide the issue
ex parte.
(4)
An order passed under sub-regulation (3) shall give reasons therefor
including justification of the penalty imposed by that order.
(5)
The Authority shall send a copy of the order made under
sub-regulation (3) to the insurer.
27.
Effect of suspension or cancellation of certificate
On
and from the date of suspension or cancellation of the certificate,
the insurer shall cease to transact new insurance business.
28.
Publication of order
The
order of the Authority passed under sub-regulation (3) of regulation
26, shall be published in at least two daily newspapers in the area
where the insurer has his principal place of business.
CHAPTER
VII
PROVISIONS
APPLICABLE TO EXISTING INSURERS
29.
Registration of existing insurers
(1)
Every insurer carrying on insurance business in India before the
commencement of the Insurance Regulatory and Development Authority
Act, 1999 (41 of 1999) and requiring registration under the Act,
shall make an application, in
Form IRDA/R2 for grant of certificate
of registration, within three months from the commencement of the
Insurance Regulatory and Development Authority Act, 1999 (41 of
1999).
(2)
Every application shall be accompanied by--
(a)
original certificate of registration;
(b)
a confirmation that the requirements of section 7 of the Act
have been met;
(c)
evidence of having rupees one hundred crore or more paid-up
share capital, in case the application for grant of certificate of
registration is for life insurance business or general insurance
business;
(d)
evidence of having rupees two hundred crore or more paid-up
share capital, in case of an application for grant of certificate of
registration for re-insurance business;
(e)
an affidavit by the principal officer of the applicant
certifying that the requirements of section 6 of the Act have been
complied with;
(f)
a certified copy of the standard forms of the insurer and
statements of the assured rates, advantages, terms and conditions to
be offered in connection with insurance policies together with a
certificate in case of life insurance business by an actuary that
such rates, advantages, terms and conditions are workable and sound;
(g)
the original receipt showing payment of fee of rupees fifty
thousand for each class of business;
(h)
any other information required by the Authority during the
processing of the application for registration.
(3)
The Authority shall register every applicant, who submits an
application in accordance with sub-regulation (2), and grant a
certificate in Form IRDA/R3.
30.
Transitory provisions
Every
existing insurer shall be required to comply with all the
regulations made by the Authority from the date of their
notification:
PROVIDED
that the regulations made by the Authority on the following subjects
viz.--
(i)
Accounts;
(ii)
Assets, liabilities and solvency margin;
(iii)
Reinsurance,
may, at the
choice of an existing insurer, be complied with within a period of
twelve months from the commencement of those regualtions:
PROVIDED,
however, the Authority may, on an application made to it by an
existing insurer, for valid reasons, grant a further period of time
to comply with the above regulations so, however, that the total
time taken by an existing insurer to comply with regulations in the
areas mentioned above does not extend beyond twenty-four months from
the date(s) of commencement of those regulations:
PROVIDED
FURTHER that where an existing insurer does not conform to the
regulations in the areas mentioned above within the time allowed to
him under this regulation, the Authority shall proceed against him
for failure to comply with its directions.
Notwithstanding
the above, nothing prevents the Authority from seeking information
from an existing insurer on the subjects mentioned in the first
proviso to this regulation and issue directions to an insurer,
wherever necessary.
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